Budget 2025
22 May 2025.
Budget 2025 sets out the Government’s programme for achieving its targets, supporting economic growth and continuing to keep a tight rein on government spending.
MSD has received funding in key areas that align with the Government’s priorities while also reducing expenditure and delivering services more efficiently.
The Government’s funding for MSD in Budget 2025:
- focuses on the Government’s target of reducing the number of people receiving Jobseeker Support by 50,000 to 140,000 by 2030
- helps ease the impact of the cost of living
- improves services to New Zealanders who need assistance
- provides a significant boost for Disability Support Services
- makes investments in services that will lead to future reductions in expenditure
- improves redress for survivors of abuse in state care, including increased payments.
Disability Support Services
Supporting the demand for disability support services, including cost pressures and additional support for residential care – $1 billion spending over 4 years.
More funding for cost pressures for the High and Complex Framework to support people with an intellectual disability who have committed imprisonable offences – $10 million spending over 2 years.
Food Secure Communities
Supporting national and regional food distribution infrastructure and community food provision – $15 million spending over 1 year.
Continuing funding for KickStart and KidsCan
Continuing funding for the KickStart Breakfast programme and KidsCan jackets – $2 million spending over 2 years (1 year for KickStart, 2 years for KidsCan).
Employment – Invest to save
Investing in 490 frontline case management staff and employment programmes, including community job coaching and bonus payments, to help get more people into work and make progress towards the Jobseeker Target – net expenditure reduction of $147.3 million over 4 years.
Jobseeker Support – Tightening eligibility for 18-19 year-olds
Adding a parental assistance test from 2027 to determine eligibility for Jobseeker Support and Emergency Benefit for single 18 and 19-year-olds – expenditure reduction of $163.7 million over 4 years.
Improving the accuracy and integrity of MSD payments
Additional integrity checks of MSD payments – net expenditure reduction of $31.6 million over 3 years.
Using Inland Revenue salary and wage data to improve the accuracy of MSD payments – net expenditure reduction of $364.5 million over 4 years.
Use of Automated Decision-Making
Updating Automated Decision-Making use in MSD processes – expenditure reduction of $157.9 million over 4 years.
Accommodation Supplement changes
Housing subsidies: Increasing the Accommodation Supplement (AS) entry threshold – expenditure reduction of $36.6 million over 4 years.
Accommodation Supplement: Adjusting area boundaries – $17.4 million spending over 4 years (funded by savings from increasing the AS entry threshold).
MSD transformation
MSD – services for the future programme – $67.6 million spending over 1 year (subsequent years held in contingency).
Pre-Budget initiatives
On 9 May, the Lead Co-ordination Minister for the Crown’s Response to the Royal Commission of Inquiry into Abuse in Care, Erica Stanford, announced a $774 million package to improve redress for survivors of abuse in state care and strengthen the care system.
As well as increasing redress payments and topping up payments already made, this funding will support MSD to handle more claims each year – rising to 1700 in 2026/27 and 1850 in 2027/28. Disability Support Services will receive funding to strengthen processes that recognise and respond to instances of abuse in care.
On 15 May, the Minister for Social Investment, Nicola Willis, announced the creation of the Social Investment Fund as part of a new approach to delivering social services to help vulnerable families and young people.
Working for Families changes and consultation
The Government has announced changes to the Working for Families scheme – increasing the abatement threshold and offsetting this cost by increasing the abatement rate and income-testing the first year of Best Start.
The Government has also launched a public consultation on proposals to improve the Working for Families scheme.
The objective is to increase certainty for families about their Working for Families payments and help families avoid getting into Working for Families debt.
Submissions close 3 July 2025. Among other things, the consultation seeks feedback on some aspects of families’ experiences as they move between a benefit and work.
